PNC's latest semi-annual survey shows small business owners' optimism about sales, profits and demand despite economists predicting a shallow recession in early 2024. It is the highest ever.
Important points
- 77% of small business owners are optimistic about the future of their business despite predictions of a recession.
- 35% say it has become harder to recruit qualified employees in the past six months.
business owners are confident
Recession fears aside, business leaders' outlook for their companies has risen heading into the fall, with 77% feeling very optimistic, compared to 49% a year ago and 60% in the spring. compared to. Almost two-thirds (65%) said they felt optimistic because they were confident in their ability to run their business.
PNC Chief Economist Gus Faucher said the surge in optimism among these executives was due in part to the resilience they've shown during the difficult years they've faced since the pandemic. I'm thinking about it.
“Business owners who survived those tough times are confident in their ability to run their businesses and are focused on what they can and cannot control,” he said in a statement.
Employment challenges remain
Only 9% of employers plan to hire more employees, but 35% said hiring qualified employees has been a challenge over the past six months. Managers cited a variety of reasons why hiring was difficult. About half said there was an overall shortage of applicants, 22% said candidates lacked the experience or skills, and 14% said potential employees expected higher salaries and benefits. 6% said the potential employee was unable to meet the legal requirements. /Security requirements.
Many employers are taking steps to attract and retain employees, including standardizing flexible working options, changing benefits, and standardizing hiring, promotion, and compensation policies.
One in three business owners (33%) expect an increase in employee compensation, up from 24% in the spring but down from last fall (40%). Additionally, 43% reported an increase in employee compensation requirements. More than 1 in 3 respondents (38%) said the need for flex time and remote work is increasing.
Cost is the biggest concern
Six months ago, companies were most concerned about supply chain issues, but now 23% are concerned about material costs, up from 9% last fall, and 14% are concerned about labor costs ( (up from 4% last fall). The proportion of respondents concerned about supply chain disruptions fell to 10% from 25% at this time last year.
Another concern is the Federal Reserve's interest rate hikes over the past year, with 65% of business owners expecting interest rates to impact their business next year, with 31% of them saying rate hikes will hurt profits. Then he answered.
Still, 55% of respondents said they expect price increases over the next six months, unchanged from last spring but down from 63% a year ago. Prices are rising for a variety of reasons, with 38% citing good market conditions and 32% citing rising labor costs (32% vs. 21% last spring) as their top concern. Nearly three in 10 (29%) report increasing prices to address rising non-labor costs.
